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Spotlight: Econ Op-eds in Summary (Week ended 19th August '20)



1. Urgent economic challenges for the new government

By: Nimal Sanderatne

· The government needs to urgently adopt policies to stabilise the economy while addressing rising unemployment and poverty in Sri Lanka. Even so, the economy’s dependence on trade, tourism and foreign remittances indicates that Sri Lanka’s recovery depends very much on the global economic recovery.

· Sri Lanka’s economy faces pressing issues, foremost of which are the ballooning fiscal deficit and the deteriorating balance of payments. These have resulted in significant economic instability and critically low foreign reserves, compounded by debt service obligations.

· In order to remedy its BOP woes, it is essential that Sri Lanka seek debt moratoria and aggressively seek bilateral and multilateral foreign assistance. Solving the fiscal imbalance will require a two-pronged strategy of revenue enhancement through tax reform and fiscal consolidation through expenditure changes.

For the full article – Refer the Sunday Times

2. New Govt. should take the foreign debt crisis seriously and stop playing popular blame game

By: W. A. Wijewardena

· Due to both government and private sector foreign borrowings, Sri Lanka is now facing a debt crisis where the country’s foreign currency reserves are insufficient to repay the loans while also financing the necessary imports.

· These high borrowings are a direct result of a lack of savings on the part of the government as well as people. While foreign borrowings are justifiable for development purposes, a crucial requirement in doing so is the adoption of prudential measures to use such borrowings and ensure their repayments.

· As such, the government should immediately start negotiating with the creditors to have the current loan repayments postponed at least for two years, while also developing a medium to long-term strategy for improving its foreign earning capacity by promoting the export of goods and services.

For the full article – Refer the Daily FT

(Compiled by: Chayu Damsinghe, Promodhya Abeysekara & Eshan de Mel)

Disclaimer: This information has been compiled from sources believed to be reliable but Frontier Research Private Limited does not warrant its completeness or accuracy. The bullet points provided for each summarised opinion article is written by Frontier Research and has no connection to the respective author. Furthermore, the information contained in these reports/emails are confidential and should not be shared publicly. Disclosure, copying and distribution is strictly prohibited.

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